Crude Oil by Solid ECN

[SOLID ECN LLC]

Brent Crude Oil prices show a slight corrective growth, recovering from the "bearish" start of the week, which led to the renewal of local lows from April 12. Analysts attribute the current increase in quotes to technical factors, while the general news background still exerts moderate pressure on oil.

First of all, traders are concerned about the risks of lower demand for energy in China. The authorities are reporting an outbreak in Beijing, which again threatens a large-scale lockdown that will affect millions of people and lead to a marked reduction in industrial production. In the capital, 22 non-imported cases of COVID-19 were detected the day before, as a result of which a number of gyms and children's clubs suspended work. China remains one of the few countries that have adopted a "zero tolerance" policy, imposing mandatory quarantine for those who come into contact with infected citizens in order to contain the spread of the disease.

The growing US dollar, which is actively in demand as a safe haven, also has a negative effect on oil. Today, traders will focus on the data on the dynamics of Durable Goods Orders. Analysts' current forecasts are quite optimistic and suggest a 1% increase in March volumes after a 2.1% decline a month earlier. Also during the day, the weekly report of the American Petroleum Institute (API) on the dynamics of stocks for the week ended April 22 is going to be released. The previous publication reflected a sharp decline in the rate of 4.496 million barrels.

Bollinger Bands in D1 chart demonstrate flat dynamics. The price range is almost unchanged, reflecting ambiguous dynamics of trading in the short term. MACD is going down, demonstrating a fairly stable sell signal (located below the signal line). The indicator is trying to consolidate below the zero level. Stochastic keeps a downward direction but is already approaching its lows, which indicates the risks of oversold instrument in the ultra-short term.

Resistance levels: 104, 106, 109, 112 | Support levels: 100, 96.5, 93.34, 90

 

[SOLID ECN LLC]

Benchmark Brent Crude Oil prices are correcting upwards, trading just below 105.00 amid fears of market participants for demand from China, where a new outbreak of coronavirus is recorded, which could trigger another tightening of quarantine measures with a possible suspension of factories and, as a result, reduction in the consumption of hydrocarbons and energy carriers.

Nevertheless, the quotes of “black gold” on world exchanges confidently hold above 100 dollars per barrel, and there are no serious prerequisites for a decline yet. Measures by the US government and allies to release additional energy resources from the reserves led to almost nothing. Also, European officials are increasingly speaking out in favor of the fact that the refusal to import oil products from the Russian Federation is now impossible, and the deadlines until 2027 are called guidelines for a complete refusal of supplies. Meanwhile, the World Bank experts in the Commodity Market Review predicted an increase in energy prices this year by more than 50%: Brent Crude Oil quotations will be 100 dollars per barrel, reaching the highest level since 2014, and then, in the subsequent two years will slow down the upward trend. EU coal and natural gas prices are expected to hit new highs, with gas prices likely to more than double from 2021 levels.

Yesterday, the American Petroleum Institute (API) announced another serious increase in weekly stocks of raw materials: the figure consolidated around 4.780M barrels, although analysts had expected growth to 2.167M barrels. Today, the Energy Information Agency (EIA) will publish its data: the value may reach 2,000M barrels.

On the global chart, the price is moving as part of the Triangle pattern formation. Technical indicators are uncertain and do not give a clear signal: fast EMAs of the Alligator indicator have crossed each other, and the AO oscillator histogram is forming rising bars near the transition level.

Resistance levels: 111.87, 127.85 | Support levels: 98.5, 84.5​

 

[SOLID ECN LLC]

Benchmark Brent Crude Oil prices are correcting, trading just above 108 dollars per barrel amid production cuts by Russia, one of the largest exporters of "black gold". It is reported that production decreased by 9% compared to March values against the backdrop of the desire of Western countries to abandon the supply of resources after the start of a special military operation by Russian troops in Ukraine.

According to statistics, the most serious reduction was made by PJSC Rosneft, reducing production by 20%, and two other major market players, PJSC Gazpromneft and PJSC Surgutneftegaz, adjusted the figure by 4% each. Against this backdrop, OPEC+, which is scheduled to meet on May 5, is considering to continue increasing production levels by 432K barrels per day instead of the traditional monthly increase by 400K to slightly compensate for the existing losses of Russian oil.

Meanwhile, the British-Dutch oil and gas corporation Royal Dutch Shell refused to purchase refined products with any content of Russian raw materials, including fuel mixtures, while the French Total Energies plans to stop the lubricants business in Russia by the end of the month.

As for local trends, the day before, the Energy Information Administration (EIA) announced an expected increase in inventories held by US firms by 0.692M barrels after a serious reduction last week by 8.020M barrels, which had a positive impact on asset quotes.

On the daily chart, the price continues to trade as part of the formation of the global Triangle pattern. Technical indicators are in a state of uncertainty and do not give a clear signal to either side: the fast Alligator indicator EMAs crossed each other, and the histogram of the AO oscillator is forming ascending bars, being at the transition level.

Support levels: 101, 90.2 | Resistance levels: 111.85, 129.38​

 

[SOLID ECN LLC]

A period of active fluctuations continues on the oil market, as attempts by the European authorities to reduce dependence on energy imports from the Russian Federation by any means can have a serious impact on quotes. Benchmark Brent Crude Oil prices are currently correcting, trading just below 106 dollars per barrel after the release of information about the possible content of a new, sixth in a row, package of sanctions against the Russian economy.

The day before it became known that the new list of restrictions may include an embargo on oil, as well as the disconnection of a number of Russian and Belarusian financial institutions from the SWIFT system. The European Union intends to propose a ban on fuel supplies from the Russian Federation by the end of this year, and until then, gradually limit imports. The approval of the sixth package of anti-Russian sanctions will require the support of all 27 member states of the European Union.

Meanwhile, OPEC+ is trying to prevent serious fluctuations in the market and is preparing to allow countries to increase the level of oil production by 432M barrels. Saudi Arabia continues to increase the pace, increasing production to 10.26M barrels in April against 10.19M a month earlier (in annual terms, the figure rose by 25.5%), while the rest of the cartel member countries in the majority reduced oil production levels: Nigeria reduced the figure from 1.42M barrels to 1.35M barrels, in Libya the production declined from 1.11M barrels to 1.07M barrels, and Congo reduced its production from 0.27M barrels to 0.26M barrels.

On the daily chart, the price continues to trade as part of the formation of the global Triangle pattern. Technical indicators are in a state of uncertainty and are not giving a clear signal: the fast Alligator indicator EMAs crossed each other, and the histogram of the AO oscillator is forming ascending bars, being at the transition level in the sales zone.

Support levels: 102, 94.3 | Resistance levels: 111.85, 127.8​

 

[SOLID ECN LLC]

Mid-term trend has changed to a downward one
WTI Crude Oil quotes are trading around 103.66 amid the publication of data on a drop in production in China to the lowest value since February 2020 after another outbreak of coronavirus infection in the country (the April purchasing managers' index (PMI) was fixed at 47.4 points). If a lockdown or other strict quarantine restrictions are introduced in Beijing, which will become a catalyst for stopping the activities of the largest production facilities, then the demand for oil will be significantly adjusted, pushing energy prices to bearish dynamics. At the moment, the activity of oil traders remains reduced, as markets in Japan, India and Southeast Asian countries are closed at the beginning of the week due to the celebration of Labor Day.

Investors are waiting for the publication of the sixth sanctions package against the Russian economy, which, among other things, will contain steps to cancel energy supplies. Representatives of the eurozone countries intend to completely get rid of oil dependence by the end of the year, and until that time they will introduce gradual restrictions on imports. It is worth noting the unity of positions on the issue: Germany stated that it was ready to support an immediate EU embargo on the import of Russian "black gold", and the authorities of Hungary, Austria and Slovakia withdrew their veto on the oil embargo after intensive negotiations, which will now allow the procedure to be carried out in a shorter time. Earlier, the Energy Ministers of the region also rejected Russia's demand to pay for the supply of "blue fuel" in rubles.

The long-term trend, however, remains upward. Now the price is approaching the upper limit of the 108.75 corridor and, if this level is broken out, the next target of quotations will be the 117.50 mark. If the resistance of 108.75 is held by the bidders, then the asset will decline to the level of 95.

The mid-term trend changed to a downward one last week after the breakdown of the target zone 100.70–99.83 and now the reference point for the "bears" is zone 2 91.95-91.08. Also last week, the price of WTI Crude Oil reached the key trend resistance of 105.09–104.22. While this area is being held, it is worth considering short positions on the instrument.

At the moment, market participants are trying to break through the key resistance of 105.09–104.22. If successful, the trend will change to an upward one, and the target zone (113.84–112.97) will become the target for purchases.

Resistance levels: 108.75, 117.5 | Support levels: 95, 85

 

[SOLID ECN LLC]

A serious rally in the oil market, associated with global economic instability and the development of the Ukrainian crisis, has been going on for more than two months and is unlikely to stop in the near future. Last week, the quotes of WTI Crude Oil resumed growth and rose to the level of 106.25 (Murray [7/8]), which is now being actively tested.

The market is in a state of considerable uncertainty, as it is influenced by several opposite factors. The pressure on energy quotes is exerted by the complex epidemiological situation in China, where an increase in the incidence of coronavirus is recorded. At the moment, Beijing remains under threat of complete lockdown, while the financial and industrial center of Shanghai has been in strict isolation for more than a month. The continued tightening of quarantine restrictions continues to jeopardize the demand for oil from the Chinese economy, which is its first global consumer.

On the other hand, the embargo announced today on the supply of Russian oil and petroleum products to the EU countries contributes to the growth of quotations. The head of the European Commission, Ursula von der Leyen, announced her readiness to refuse the purchase of raw materials by the end of this year. However, an exception will be made for a number of countries most dependent on Russian oil, for example Hungary and Slovakia. The embargo on Russian resources, which account for 26% of imports to the EU, creates the problem of replacing the missing volumes. It will not be easy to solve it, since global production is already unable to meet demand. Meanwhile, the OPEC+ cartel is in no hurry to increase oil production, as its members are satisfied with the current windfall. It is expected that during the meeting scheduled for Thursday, a decision will be made to maintain a moderate pace of production growth.

Another factor supporting prices is the reduction of reserves of "black gold". According to the latest data from the American Petroleum Institute (API), a decrease of 3.479M barrels was recorded. A similar report from the Energy Information Administration of the US Department of Energy (EIA) will be released today, which may also reflect a downward correction of 0.829M barrels. Under these conditions, oil quotes may continue the upward trend.

Consolidation of the price above the mark of 106.25 (Murray [5/8]) will give the prospect of growth of the trading instrument to the levels of 112.50 (Murray [6/8], Fibo retracement of 23.6%) and 118.75 (Murray [7/8]). If the price consolidates below the middle line of the Bollinger Bands and the 100.00 mark (Murray [4/8]), the decline will resume in the area of 93.75 (Murray [3/8]) and 87.50 (Murray [2/8], Fibo retracement of 61.8%).

The indicators do not give a single signal: the Bollinger Bands are horizontal, the MACD histogram is at the zero line, its volumes are insignificant, and the Stochastic is directed downwards.

Resistance levels: 106.25, 112.50, 118.75 | Support levels: 100, 93.75, 87.5​

 

[SOLID ECN LLC]

Prices for benchmark Brent Crude Oil are correcting, trading above the 110 dollars per barrel mark amid the disclosure of information about shady transactions for the purchase of Russian "black gold" by China.

There has been an upward turn in the market after the Financial Times published an article that disclosed information about the purchase of Russian oil by Chinese refineries from state-owned traders incognito in order to avoid US sanctions. The newspaper refers to an employee of a private oil refinery in Shandong, who said that deliveries have been carried out since the beginning of March, and these transactions have not been publicly disclosed. First of all, this news alerted officials in the USA and the EU, who are developing restrictions on energy imports from the Russian Federation. So, the EU authorities presented the sixth package of sanctions against the Russian economy, which includes steps to phase out the supply of "black gold". According to the President of the European Commission, Ursula von der Leyen, the achievement of a full embargo on oil will be possible only in six months, and on petroleum products – at the end of this year. An exception will be made only for Slovakia and Hungary, which will still be able to buy resources from Russia under existing contracts, since their dependence on supplies is very high. The sixth package of sanctions will be approved on May 10 at the next meeting of the EU Council on Foreign Affairs.

On the weekly chart, the price attempts to overcome the resistance line of the global triangle pattern. Technical indicators reversed and issued a new buy signal: the fast EMAs of the alligator indicator crossed the signal line from the bottom up, and the histogram of the AO oscillator moved into the buy zone.

Support levels: 100.8, 90.1 | Resistance levels: 113.26, 129​

 

[SOLID ECN LLC]

The asset is in correction; the probability of fall is maintained.

On the daily chart, an ascending wave C is developing, in which the first wave 1 of (1) of C was formed. At the moment, the downward correction continues to develop as the second wave 2 of (1) of C, in which the lower level wave a of 2 has formed and the wave b of 2 is developing.

If the assumption is correct, the price will fall to the levels of 77.08 - 62.5. The level of 139.45 is critical and stop-loss for this scenario.

 

[SOLID ECN LLC]

On the daily chart, crude oil tests the resistance at $109 for the third continues trading day. The level's break-out is imminent. In this case, the next target will be March 24th peak at $115.8.

On the 6H time frame, the pair is trading in the uptrend tunnel struggling for a break-out. If the bears can push the black gold below the 25 daily moving average, we will witnessing a double top pattern. In this scenario, the correction started from March higher highs will continue, and a retest of the support levels at $99.5 and $99 can be seen in the upcoming weeks.

Resistance Levels: $109.26 , $111.69 , 126.63 | Support Levels: $105.2 , $99 , $92.2

Trade suggestions:
Buy stop: $110.3 , Target: $115.5 , Stop: $105.4
Sell stop: $106.1 , Target: $99.3 , Stop: $110.8​

 

[SOLID ECN LLC]

Brent Crude Oil prices are consolidating near 104.00, correcting after an active decline yesterday. At the beginning of the current trading week, quotes lost sharply in value in response to reports that several EU countries are still blocking the introduction of a full-fledged oil embargo on supplies from Russia.

Last Sunday, the leaders of the G7 countries held talks via videoconference, within which the decision to phase out energy resources and ban the import of "black gold" from Russia was supported. Against this background, the participating countries pledged to cooperate on the issue of ensuring the stability of supplies, finding suppliers, and reducing fuel dependence. Meanwhile, negotiations in the EU concerning new sanctions under the sixth package of economic restrictions on the supply of Russian oil and petroleum products ended unsuccessfully. The representatives of Hungary voted against them, as the country's dependence on supplies from the Russian Federation is about 60%, and this blocking does not yet allow the introduction of a pan-European embargo. The next round of negotiations can be started today, but the head of the European Commission, Ursula von der Leyen, said that progress in discussing the issue with the country's leader Viktor Orban is noticeable.

Meanwhile, Saudi Arabia adjusted Arab Light crude prices to 4.40 dollars per barrel for June Asian deliveries for the first time in four months. The indicator dropped significantly compared to the May value of 9.35 dollars. The decline is due to the current uncertainty in the oil market and, in particular, a possible ban on the supply of Russian "black gold" due to the escalation of the military conflict in Ukraine and the strengthening of quarantine restrictions in China. The country's authorities, adhering to the policy of "zero tolerance" regarding the spread of COVID-19, introduced quarantine in Shanghai and Beijing, which led to a noticeable decrease in demand in the oil market.

On Tuesday, traders will focus on the publication of the American Petroleum Institute (API) on stocks in the US for the week of May 6. The previous report reflected a sharp decline of 3.479M barrels.

On the daily chart, Bollinger bands show predominantly flat dynamics: the price range practically does not change, remaining quite spacious for the current level of activity in the market. MACD falls below the signal line, keeping a strong sell signal, and prepares to consolidate below the zero line. Stochastic shows a more active decline, rapidly approaching its lows and indicating that the instrument may become oversold in the ultra-short term.

Resistance levels: 106, 109, 112, 115.5 | Support levels: 102.57, 100, 96.5, 93.34